Generating maximum wealth is possible for anyone who is willing to put in the effort. Anyone who is willing to pay the price can make it happen.
There are those who believe that wealth is reserved for the rich. They are wrong.
Maximum wealth creation is possible for anyone. One must believe that it’s possible and then put in the necessary work to make it happen. Maximizing wealth requires patience, proper execution, vision, strong desire, and the ability to pivot. Maximum wealth creation is making the most of every penny that we have. It’s simply being a good steward of our financial resources.
Maximum Wealth — Why It’s Important
Most of us work for a living. Our nine-to-five jobs are what fund our lifestyles. Each dollar we bring home is used to pay the bills, buy food, take vacations, fund our retirement, and more.
The majority of families can accomplish all of their financial goals with a solid plan and proper execution. It’s not easy but it is possible. Trade-offs will be required. Wasteful spending must be scrutinized and eliminated. Here’s a helpful article that I wrote about how to reduce spending in a positive manner.
Poverty is a neutral gear. Coasting our way to maximum wealth is improbable.
Producing wealth is not greedy. It is simply putting our family first.
15 Practical Steps to Create Maximum Wealth
Put these practical steps into practice. Then, continue to repeat these steps on an annual basis. The goal is to make progress each year.
#1 Find Out Where You Are
A balance sheet is a financial snapshot. Family net worth is calculated by subtracting liabilities (debts owed) from all assets. Assets minus liabilities equals net worth.
An income statement is used to determine profitability. Income minus expenses equals net profit (hopefully). This can be done at any time. It should cover a fixed amount of time. Monthly is better than nothing. I recommend completing income statements quarterly and annually.
#2 Pull Your Free Credit Report
My friend Dave hates credit reports. That’s okay, though. We just keep swimming.
Credit scores are available through most banking apps now. I am able to get my score at any time without harming my score.
You should go here, however, to get a copy of your free credit report. Request one at least annually. Look for any irregularities and immediately address them.
#3 Make An Annual Budget
I prefer the zero-dollar type budget — just like my friend Dave. I don’t use apps like EveryDollar or YNAB. Feel free to use them if you like. I just don’t like 3rd parties having unfettered access to my financial information.
A zero-dollar budget can easily be DIY’d. Start with your income. Then begin to spend every single penny on paper. Don’t forget those pesky sinking funds. Keep spending until you get to $0.
If you’re in the hole you will need to cut spending or earn some more money. If you’d like to know how to increase your salary click on here for an article I wrote.
#4 Revisit Your Debt Plan
Debt is a personal issue — kind of like facial hair. Mustaches are wrong on some and are perfect on others.
Debt is similar.
Some of you will never believe automobiles can be purchased with cash. I refuse to expend energy in situations like that. If you love your loan then keep it. I could say that “DEBT IS DUMB” over and over and get no results.
Determine which debts you want to eradicate. Complete a debt snowball calculation.
Continue to rid yourself of debt. Each year reevaluate your situation.
#5 Pull A Social Security Report
Social security is part of most retirement plans. It’s important to ensure that it is getting calculated correctly. Your estimated monthly retirement annuity is available for your review. That number should be considered when developing an overall retirement strategy.
#6 Reevaluate Your Retirement Strategy
How much is needed to retire with dignity? Do you know that elusive number? It won’t be etched in stone. The future is murky. However, we should at least have a general idea of what’s needed.
Have you started contributing towards retirement? If not, why not? When will you start? Waiting until you’re out of debt is a terrible idea.
Are you contributing enough? Is a rebalance needed?
#7 Discuss Open Enrollment
Open enrollment at most companies happens in late autumn. This is usually a time when we find out about the new, higher insurance premiums and discounted benefits.
It’s also an opportunity to tighten up areas of neglect.
Consider the benefits of a high-deductible plan.
Ignoring short or long-term disability plans could bite you on the southside.
Does your kid need braces? Is extensive dental work possible? If yes, then a flexible spending account is a wise move.
#8 Conduct A Comprehensive Insurance Review
A great insurance agent is awesome. Resist the urge to buy the cheapest policies. Develop the habit of discussing your insurance needs annually with your agent.
Rightsizing risk is imperative.
Do you have a portable life insurance policy? An employer-sponsored policy is nice but we all need coverage outside of work.
You might not be able to buy everything your agent recommends. No worries. You need to understand which risks you’re willing to absorb with open eyes.
#9 Tighten Up Your Resume
Update your resume at least once per year. Practice writing effective and compelling cover letters. Think through potential interview questions.
How’s your LinkedIn profile (click to connect with me)? Update your profile regularly. Play nice in the LinkedIn sandbox. Keep your network fresh and alive.
#10 Create Maximum Wealth With Sinking Funds
Hopefully, you have an emergency fund. Experts state that an emergency fund should have about 3-6 months of expenses at your disposal. If you do not have one begin making regular contributions.
Eventually, we need to go beyond the emergency fund, however.
Sinking funds are systematic contributions to an account that is used to purchase or replace an asset. HVAC systems fail. Homeowners need an HVAC fund. Regular contributions can be made to one and then when it’s fully funded it can be replaced — before it even goes kaput.
Annually we should make a list of our financial priorities and create sinking funds based on our financial values.
#11 Have Your Automobiles Inspected
Everyone needs a reliable mechanic. They are also difficult to find.
Automobile ownership can be expensive. Annual auto inspections are a great idea. Have your mechanic conduct a full inspection soon.
What expected repairs are on the horizon? Are you able to create a sinking fund?
Waiting for an emergency does not generate peace.
#12 Review and Evaluate Your Last Will & Testament
Getting a last will & testament is evidence that you love your family. They should not have to think, wonder, or guess what’s happening. Memorialize your wishes and then review them each year.
#13 Take A Time Out For Taxes
Minimize your tax refund. The government is wasteful.
Developing a tax strategy is wise. Leverage as many tax-deferred opportunities as possible. Retirement contributions (non-Roth) reduce your taxable income dollar for dollar.
Paying taxes is not patriotic. Reducing taxes is not taking advantage of loopholes. Legally reduce your taxes as much as possible.
#14 Charity Checkpoint
Very few families are stingy. Everyone that I know wants to give more money away.
Did you give abundantly last year? Do you want to give more this year? Are you able to give more this year? If yes, make sure that giving is part of your budget.
Give with joy and cheer.
#15 Sharpen The Saw
All work and no play makes Jack a dull boy. Find some things to do that bring you relaxation and fund them. We can’t go with gazelle intensity indefinitely.
This game can be long and grueling. Ignoring yourself could be detrimental to your long-term health. Generating maximum wealth should be fun.
Enjoy it.
I dare you to profit!